Southwest labor contract includes pay raises

DALLAS — Southwest Airlines Co. said Tuesday it reached a tentative agreement to give pay raises to about 5,300 customer-service employees.

Southwest didn't say how big the pay raises would be. It said the four-year deal also includes benefit increases in exchange for giving the company more scheduling flexibility and productivity improvements.

The agreement, which still needs ratification by employees, is retroactive to last year and runs through October 2012.

The customer-service workers at airports and call centers are represented by the International Association of Machinists and Aerospace Workers. The union and airline have been negotiating since August 2008.

The union's local negotiating committee unanimously recommended the contract to members. The union's district president, Tom Higginbotham, said the deal "recognizes the vital role IAM members play in Southwest's success by providing wage increases today and enhanced retirement benefits tomorrow."

Southwest was the most consistently profitable U.S. carrier from 1991 until last year but has lost money in the last three quarters. To reduce its work force and save money, Southwest plans to offer early-out incentives to nearly all its 35,000 employees.

Terms of the buyout offers were disclosed to employees on Monday and include cash severance that will average $30,000 to $50,000. Southwest also offered company-paid medical and dental coverage for six months, and travel benefits including lifetime free flights for some workers who wouldn't ordinarily have qualified yet for such perks.

The offers stand until June 19. Company executives have said they don't have a goal for how many jobs they'd like to eliminate with the buyouts. They haven't ruled out layoffs if air traffic and revenue continue to decline.

Still, the Dallas-based airline in recent months has struck new contracts with several labor groups that would give pay raises to the employees.

Last month, ground workers ratified a contract calling for 3 percent annual raises, and pilots will vote on a five-year deal that includes increased pay and retirement benefits. Flight attendants will vote on a contract that the union said included pay raises, larger 401(k) contributions and better job security.

Southwest shares rose 7 cents to close at $7.45 Tuesday.